“As house-building slows and the sandwich generation grows they are set to increase.

“Extended families are then better able to exercise their care responsibilities and burden on the taxpayer falls.’

The Foundation also recommends that grandparents wishing to live near their children be given special status on council housing lists.

The call comes as ministers face pressure to explain how they will fund plans to give free personal care at home to 400,000 vulnerable elderly people.

The Care Quality Commission, the health and social care watchdog, warned this week that with our ageing population 1.7 million adults across Britain will need care by 2030.

Last week the Centre for Social Justice recommended tax incentives of up to £20,000 to families who want to build granny flats.

Matt Thomson, from the Royal Town Planning Institute, said that imaginative thinking was needed to deal with an ageing population but that changing the planning laws that could have unintended consequences.

“’Granny flats’ can be part of a solution for families caring for elderly dependants, but they can also be a long-term burden for home owners, particularly when they are, sadly, no longer needed,” he said.

“This is because they are often only permitted subject to a condition that the ‘flat’ is ancillary to the use of the main house, and cannot be sold as a separate home, which could have a harmful impact on neighbours."